by Thomas Lys and Daniel Taylor
In widely circulated remarks, Federal Reserve Chairman Jerome Powell recently stated that the Fed’s COVID-19 response is “absolutely not” contributing to income inequality. But our data indicate that Powell’s statement is absolutely wrong. We propose an alternative policy that addresses the underlying source of the economic decline while seeking to ensure greater equity in who benefits from the Fed’s actions. We combine a bit of common sense with a radical departure from Fed policy through stimulating the economy by supporting consumer credit not corporate credit.